Production Possibilities Frontier $(14$ points$)$

Suppose we have two countries, US and Canada; each country produces only two goods, apples and oranges. The following table shows the number of workers required to produce one unit of each good in each country:

$\backslash$table$[[,$Apple,Orange$],[$US$,1$ worker,$1$ worker$],[$Canada$,4$ workers,$3$ workers$]]$

a$.$ Draw the individual PPFs for each country. Note that in order to draw the PPF first you need to calculate the maximum amount each country can produce. Please put apples on the vertical axis and oranges on the horizontal axis. Make sure you label all the values that touch the vertical and horizontal axis. $(4$ points, $2$ points each$)$ b$.$ Calculate the opportunity cost of producing $1$ unit apple or orange in each country. Fill in

the table. $(4$ points; $1$ point each$)$

c$.$ Which country has absolute advantage in apples? Why? Which country has comparative

advantage in oranges? Why? $(4$ points; $1$ point each$)$

d$.$ Under free trade between US and Canada, which country should specialize in producing

apples? Why? $(2$ points; $1$ point each$)$Production Possibilities Frontier $(14$ points$)$

Suppose we have two countries, US and Canada; each country produces only two goods, apples

and oranges. The following table shows the number of workers required to produce one unit

of each good in each country:

Apple Orange

US $1$ worker $1$ worker

Canada $4$ workers $3$ workers

Suppose each country has $1200$ workers.

a$.$ Draw the individual PPFs for each country. Note that in order to draw the PPF first you

need to calculate the maximum amount each country can produce. Please put apples on the

vertical axis and oranges on the horizontal axis. Make sure you label all the values that

touch the vertical and horizontal axis. $(4$ points, $2$ points each$)$

b$.$ Calculate the opportunity cost of producing $1$ unit apple or orange in each country. Fill in

the table. $(4$ points; $1$ point each$)$

Opportunity cost of apple Opportunity cost of orange

US $1$ Apple $=()$ Orange $1$ Orange $=()$ Apple

Canada $1$ Apple $=()$ Orange $1$ Orange $=()$ Apple

c$.$ Which country has absolute advantage in apples? Why? Which country has comparative

advantage in oranges? Why? $(4$ points; $1$ point each$)$

d$.$ Under free trade between US and Canada, which country should specialize in producing

apples? Why? $(2$ points; $1$ point each$)$